Sprint: Cooperman, Ergen See Reasons for a Higher SoftBank Bid

By Tiernan Ray

Noted value investor Leon Cooperman of Omega Advisors was talking with CNBC’s Scott Wapner a short while ago about the battle between Dish Network (DISH) and Japan‘s SoftBank (9984JP) for control of Sprint-Nextel (S).

Cooperman, who has a $2 cost basis in Sprint shares, and who has also been a holder of Dish stock, reiterated the view he’s made in past, to wit, both Dish chairmanCharlie Ergen, and SoftBank CEO Masayoshi Son, are “terrific guys,” and he’d be happy to have either company win the deal.

Cooperman anticipates the bidding war heating up:

We think the special committee of Sprint [managing the M&A process] will allow Dish into the bidding, giving them access to confidential information information, and will cause SoftBank to up their bid. We’re agnostic [regarding which firm wins], and on behalf of our clients, we want the best price. There’s tremendous value to Dish’s spectrum. As for Mr. Son, there are very few in media more accomplished than him. These are two terrific guys. The future of the company [Sprint] with either owner is sufficiently attractive that we want to own it. We’ll get some back in cash, and the rest, we’ll let it ride.

As I noted earlier, SoftBank yesterday issued a filing defending the cost savings it will bring to Sprint. Following Dish’s Q1 report this morning, Ergen came on the company’s conference call with analysts in the last half hour, sounding an unusually diplomatic tone, commending SoftBank for recognizing some of the same “synergies” he has pointed out, while offering other savings based on SoftBanks’s greater access to Sprint’s financials:

I think that we haven’t been allowed to go into diligence. We haven’t started due diligence on Sprint itself. Most of the information we have is obviously peripheral to that. Everything we’ve seen is — only makes us more confident. I think the biggest thing is SoftBank now has come in with more details about their synergies and build plans and so forth and so on. There’s a lot of good ideas in what they’re presenting and a lot of synergies that are — most of the synergies, the vast majority of the synergies they’re talking about would also be available to us and obviously they’ve had the benefit of a more active diligence process. So I think that to SoftBank’s credit and to some degree our credit, there is a real value in Sprint that in a proper strategic fashion, whether that be with SoftBank or with DISH, that value creation can be achieved and obviously that’s good for Sprint shareholders.

When Ergen was pressed on his confidence in Dish’s own bid, Ergen echoed Cooperman’s theme that SoftBanks’s bid should increase if it wants to compete with Dish:

Yes, very comfortable [with Dish's bid], because I think our bid today is $7 — a little over $7, based on cash and their bid is $6.38, based on the fact that he’s [Masayoshi Son] getting 45% of the Company for $5.25 and $7 for the other piece of it. I think the interesting part of that is that ultimately I think the way it really boils down, there’s a lot of side show stuff going on obviously in a big merger like this but we believe in our synergies and we bid $7 because we believe in those synergies. We bid a little more than $7 now, depending on our stock price. And they — they’ve now come up with more synergies. They actually come up with synergies that they are starting to articulate now. They haven’t increased their bid based on those synergies. So if they — I would expect that if you — since we believe in our synergies, we bid a higher price. If they believe in their synergies I would expect obviously they may top our bid. If they don’t believe in those synergies, obviously wouldn’t.

Sprint shares today are up 4 cents, or half a percent, at $7.36, while Dish stock is down $1.12, or 2.8%, at $38.49. Shares of Sprint’s broadband partner, Clearwire (CLWR), which is implicated in both bids for Sprint, are down 12 cents, or 3.5%, at $3.27.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.